Where
Credit Isn’t DueCritics
blast a Niagara Mohawk proposal that would assess security
deposits to customers with compromised credit ratings

At
a public hearing earlier this week, Albany residents resoundingly
rejected a controversial proposal that would allow the region’s
largest utility provider to assess a two-month security deposit
to new customers whose credit ratings fall below a designated
score.

Approximately two dozen people gathered at City Hall in Albany
on Tuesday (Aug. 5) as New York’s Public Service Commission
sought public opinion on a request by Niagara Mohawk for authorization
to assess security deposits averaging $150 to new customers
based on credit scores. The deposits would be held to recoup
potential losses from defaulted payments. The PSC—which regulates
various utilities throughout the state—could make a decision
later this month on NiMo’s policy, one that has been blasted
by politicians and citizen advocates alike who claim it will
disproportionately affect renters and people with existing
financial difficulties.

NiMo’s proposal would allow the utility provider to assess
a security deposit based on a customer’s credit and past payment
history. Homeowners, people over age 62, and those who are
blind, disabled or on public assistance would be exempt from
the security-deposit policy.

The PSC currently allows utility providers to assess security
deposits based on past payment history and other conditions,
but NiMo believes that credit-based deposits will be a better
way to avoid some of the financial losses the company has
suffered due to unpaid bills.

NiMo—which provides gas and electric services to approximately
1.5 million customers throughout New York—says it has lost
an average of $65 million in unpaid bills over each of the
past three years.

“We’re
acting in the interests of all of our customers who pay their
bills in a timely manner,” said NiMo spokesman Alberto Bianchetti,
“because they are the ones who bear the burden of maintaining
our infrastructure so that we can continue to provide all
customers with our services.”

In March, the company enacted a similar policy for collecting
security deposits from customers based on their ability to
prove responsibility for a bill or long-term tenancy. During
the following two months, 8,200 new customers were required
to front a two-month deposit, and 1,000 people were denied
service for failing to submit a security deposit, NiMo told
Syracuse’s Post-Standard on June 18.

“On
the surface, I think [charging security deposits for utility
services] is an awful idea and it sets a terrible precedent
for a number of reasons,” said Russ Haven, legislative counsel
with the New York Public Interest Research Group, who testified
at Tuesday’s hearing. “Obviously the loss of money hurts NiMo,
which means they can’t run as efficiently as possible, but
we’re talking about an essential service here. This isn’t
about whether or not you can get an American Express Platinum
Card, this is about whether consumers can get hooked up to
essential gas and electric services to light your lights and
heat your home.”

Haven and others say that NiMo’s proposal will unfairly target
younger and poorer renters with little or no credit histories,
and does not take into account a tenant’s willingness to pay
his or her bills.

“NiMo
is saying that [credit ratings] will be reflective of how
customers will pay their utility bills, but intuitively I
don’t agree with that,” said Charles Brennan, with the Public
Utility Law Project. “I think people will pay to keep the
lights on before they pay the credit card.”

Both Brennan and Haven agreed with the number of speakers
at Tuesday’s hearing who provided anecdotal evidence that
credit ratings are notoriously inaccurate. Haven pointed to
a study released on July 31 by Congress’ investigative body,
the General Accounting Office, that notes the GAO’s inability
to determine whether credit reports were accurate or not since
credit bureaus do not provide adequate information about how
they create a credit score.

But Bianchetti said that using credit ratings to determine
the guidelines of a service contract is a perfectly acceptable
business practice.

“That
brings us in line with a number of other vendors throughout
the country—mortgage providers, providers of car loans and
credit cards,” Bianchetti said. “[Credit ratings are] part
of doing business in America today.”

Whether NiMo’s security-deposit proposal is a sound business
policy or not, Monique Marshall, of United Tenants of Albany,
said the company’s idea is poor public policy. Marshall, who
spoke at Tuesday’s hearing, noted that whether families have
utility services or not, they’ll have to keep on living.

“You
can’t put a price on the potential of a child coming home
to a house with no lights and meals eaten out of cans,” Marshall
said. “We should not leave our children in the dark.”

Albany’s Common Council agreed, passing a resolution in opposition
to NiMo’s security deposit proposal at its meeting earlier
this week. The resolution was sponsored by Alderman Dominick
Calsolaro (Ward 1), who along with NYPIRG’s Haven requested
that the PSC hold a public hearing on the issue in Albany.

“Census
numbers show that somewhere around 70 percent of the city’s
residents are renters, and those are the people who are going
to be affected by this,” Calsolaro said. “I’m glad we had
so many people show up in opposition.”

—Travis
Durfee

Is
This Good for BIDness?A proposal for an expanded Central
City business improvement district in Albany has derailed
plans to enlarge the Lark Street BID

What’s next, the Greater Albany Business Improvement District?

That is what Alderman Richard Conti (Ward 6) is wondering
now that his plans to extend the boundaries of the Lark Street
BID have been eclipsed by discussions about the creation of
a much larger Central City BID.

Conti’s idea was scrapped at this week’s meeting of the Albany
Common Council when Council President Pro Tempore Michael
Brown (Ward 3) announced the creation of an ad hoc committee
to discuss the viability of combining the Central and Lark
Street business improvement districts.

Conti wanted to expand the Lark Street BID to include the
strip of Washington Avenue from Lark to Swan streets, and
the stretch of New Scotland Avenue from Madison Avenue to
Myrtle Avenue. Brown criticized Conti’s proposal, saying the
expansion would exclude residents and business on Lark Street
north of Washington Avenue.

“People
looking to expand the Lark Street BID and ignore upper Lark
are so focused on Lark Street’s village image that they are
ignoring the people across the street,” Brown said. “Lark
Street BID is not an island and the people north of Washington
should not be treated like refugees in their own city.”

But Conti contends that if any exclusion occurred, it was
merely because of the nature of business improvement districts,
which by design tend to focus on the needs of commercial districts,
not residential ones like upper Lark Street.

“Looking
at the strength of Lark BID as an institution,” Conti said,
“the goings-on at the arts center and the library on Washington
could complement the things we are trying to do on Lark, and
the same can be said for the businesses on New Scotland. .
. . Northern Lark Street is a different area because it is
a residential corridor.”

Brown contests this point, saying that nine businesses exist
on Lark between Washington and Clinton avenues. He says the
street cleaning and neighborhood and storefront beautification
services offered by the BID could benefit existing businesses
and possibly entice prospective businesses.

As nonprofit organizations, business improvement districts
are given the ability to assess an additional tax on the residential
and/or commercial properties within their boundaries. A BID
uses the funds to market and fund events related to its specific
district, and provide additional street maintenance and beautification
projects beyond the services provided by the local government.

The Lark BID, for example, assesses a 0.267-percent tax on
all residential and commercial properties within its boundaries,
meaning that for a property assessed at $100,000, taxpayers
within the Lark BID would pay $267 in taxes. The Lark BID
collects an average of $55,000 a year through this tax, and
with its operating budget of roughly $200,000 (the rest comes
from fund-raising), finances various events like Larkfest
and Art on Lark.

The Central Avenue BID, on the other hand, assesses a 0.264-percent
tax only on commercial properties within boundaries much larger
than the Lark BID. The Central Avenue BID, which covers businesses
on Central from Lark Street to the city’s corner with Colonie,
collects roughly $450,000 a year from its special tax. The
Central BID helps fund events like Drive-in Movie Night at
Armory Center.

Both Anthony Capece, executive director of the Central BID,
and Joe Cunin, director of the Lark BID, acknowledged that
a merger could create economies of scale when bidding for
certain services (Web design, accounting, supplies) and lead
to savings in overhead costs. But Cunin wondered how a combined
BID would affect the identity of the individual districts
each BID promotes.

“We
try to promote Lark Street for what it is and what it provides,
and that is very different than what happens on Central,”
Cunin said. “If the Lark Street BID just becomes an extension
of the Central Ave. BID, I don’t think we would be able to
maintain our identity and the level of distinction that comes
along with being Lark Street.”

The Central City BID idea has also led representatives from
other neighborhoods throughout the city to express interest
in seeking BID services for commercial pockets within their
wards that are too small to maintain their own special business
district.

Alderwoman Carolyn McLaughlin (Ward 2) said clusters of small
businesses in the South End could possible utilize BID services.
Alderman James Sano (Ward 11), who will head the new committee,
said the same for two commercial districts further down New
Scotland Avenue between Ontario and Quail streets and across
from St. Peter’s Hospital.

Though Conti is willing to consider the BID expansion and
is optimistic that the new committee will be able to handle
the issue, he expressed concern at the sudden BID fever.

“One
of the beauties about Albany is that we are a city of neighborhoods,
and we have unique neighborhoods, and that is one of the things
that attract people to this area,” Conti said. “[With a combined
BID] you don’t know if you’re going to have a cookie-cutter,
once-size-fits-all approach or if you’re going to have the
individuality that makes sense for individual neighborhoods.”

Aldermen Glen Casey (Ward 11) and James Scalzo (Ward 10) join
Sano, Brown and Conti on the Central City BID committee. Sano
said a date has yet to be set for the committee to begin discussing
the issue, but he hopes the group will be able to hold a preliminary
meeting within the next three to four weeks.